What is risk transfer and how can it be something other than insurance?
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Insurance is a risk transfer, but not all risk transfer is insurance. That said, it is not uncommon for prepaid benefit plans to be called insurance, especially with dental and vision plans in the United States.
One of the most common non-insurance risk transfers is that of a loan or credit card company. The loan company takes the risk from the seller that the buyer will be unable to pay a debt. The seller gets full payment upfront, the buyer gets an installment plan, and the bank gets the risk and interest.
Im sorry for not clarifying this earlier, can I get examples related to disaster risks (can be insurance related no worries)
You buy a house in a flood zone from a wealthy family. They sell it to you with a million dollar damage warranty covering flood damage for next dozen years. You have transferred your flood damage risk to the wealth family that sold you the house.
Many types of “risk transfer” exist: Product and service warranties / stocks / stock options / stock warrants / lottery tickets / health plans / buying a business /…
If the products exchanged involve _chance_ there is a “transfer of risk” involved.
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